Traditionally, raw materials inventory has been managed by a buyer at a company monitoring inventory levels, projecting usage, and placing orders on suppliers to have shipments of the raw materials arrive in time to keep inventories within targeted levels. In order to cover uncertainties in usage and supply, the targeted levels tend to have a significant safety factor built into them. Certain vendor managed inventory methods have been developed that involve collaboration between the buyer, who regularly shares inventory information and usage forecast, and the supplier, who takes on the responsibility for shipping the materials in time to keep the inventories within targeted levels. Some of the known methods have achieved significant reduction of raw materials inventories at the consuming party without concomitant, and undesirable, increases in inventory levels to the supplying party.
While constituting an improvement, known collaborative methods cannot accommodate situations where there are a plurality of independent, and normally competitive, suppliers of the same raw material to the same consuming party location. Some attempts to address such situations have defined a standard split, such as 70/30 and reveal to each supplier the proportion of inventory and usage forecast according to that split. Each supplier then manages that split of the raw material flow to maintain the inventory within targeted levels. However, like stacking tolerances, such a division leads to higher variability in inventory levels. Moreover, such a division between suppliers results in a lack of clear responsibility on the part of suppliers for the overall inventory and shortages and disruptions may occur to the detriment of the consuming party.
Accordingly, industry is in need of a method of collaborative inventory management between a plurality of independent suppliers that is effective in providing a steady supply of raw material to a consuming party without excess inventory build up at either the supplier or the consuming party. A need exists for a method that further manages raw material inventory with minimal risk of shortages and disruption. Still further, the desired inventory method must satisfy the needs of the industry for a collaborative inventory management from a plurality of independent suppliers without compromising confidential and proprietary business information of the involved parties.